In today’s briefing:
- PDD (PDD US): 1Q24, Rev Up by 131% and Margin Reaching Historical High
- Fancl (4921 JP): Worth A Bet Given Negative Impact Of Kobayashi Products Recall Subsiding
- Daifuku (6383) | Time to Pick up Global Leader
- Tech Supply Chain Tracker (23-May-2024): UMC begins move-in at Singapore fab.
- Indian Banks Screener FYE24, Part 2: Bandhan and UBI added to the buy list
- [Li Auto (LI US, BUY, TP US$25) TP Change]: Delaying BEV Is the Wrong Approach to Competition
- AMAT. No Beat, No Raise, No Slump. But Why?
- KS / Kuaishou (1024 HK): 1Q24, Strong GMV and Historical High Op Margin Again
- New Experiments in China’s Crowded EV Space
- INOD: Profitable AI, Initiating
PDD (PDD US): 1Q24, Rev Up by 131% and Margin Reaching Historical High
- Total revenue rose by 131% in 1Q24 with advertising up by 56% YoY and commission up by 327% YoY.
- In 1Q24, both the operating profit and the operating margin reached record highs.
- The historical price / sales ratios suggests a significant upside. Buy.
Fancl (4921 JP): Worth A Bet Given Negative Impact Of Kobayashi Products Recall Subsiding
- Fancl Corp (4921 JP)‘s share price has declined 18% year-to-date, greatly under-performing the Nikkei 225 (NKY INDEX) which was up 17% year-to-date.
- The company recently announced FY24 results (fiscal year ending March). Sales grew 7% yoy and operating profit grew 60% yoy in FY24.
- I believe the stock price is attractive at 23x 2024 PE with 15% expected earnings CAGR for the next 3 years.
Daifuku (6383) | Time to Pick up Global Leader
- Daifuku released FY3/24 results on 10 May. Since then the share price has declined by 15%, giving investors an attractive entry point.
- Daifuku is a key beneficiary of warehouse automation, which is forecast to grow at a CAGR of over 6%, with industry spend projected to reach $37 billion by 2030
- We expect the market to price in an order recovery in the core electronics segment and believe that the MTP is yet to be factored into the current share price.
Tech Supply Chain Tracker (23-May-2024): UMC begins move-in at Singapore fab.
- UMC Singapore fab is in the process of moving in new equipment to enhance its production capabilities.
- Japan has a target of manufacturing 12 million software-defined vehicles by the year 2030.
- India continues to enforce import restrictions on IT products, impacting the sector’s growth and development. Power HV brings advanced technology to transformer monitoring in the energy industry for increased reliability.
Indian Banks Screener FYE24, Part 2: Bandhan and UBI added to the buy list
- We add value plays Bandhan and UBI to the buy list alongside HDFC Bank and Baroda, turning neutral from negative on SBI. Bandhan is our core Indian bank pick, UBI benefits from improving return trends
[Li Auto (LI US, BUY, TP US$25) TP Change]: Delaying BEV Is the Wrong Approach to Competition
- LI Auto’s decision to push out its BEV launch to 2025 is a delay of multi-faces at a time when China’s EV market is chaotically.
- We keep rating @BUY because LI still possesses the SUV niche, enjoys a healthy margin and have ample cash.
- We cut TP from US$40 to US$25 and maintain BUY.
AMAT. No Beat, No Raise, No Slump. But Why?
- AMAT Q124 revenues of $6.65 billion, in line with guidance and essentially flat both QoQ and YoY. Current quarter guidance also flat sequentially
- WFE valuations are at all time record highs while revenues remain on life support from China
- If China revenues fall off before non-China returns to growth, the WFE segment could be in for a world of pain.
KS / Kuaishou (1024 HK): 1Q24, Strong GMV and Historical High Op Margin Again
- In 1Q24, revenue grew by 17% YoY and e-commerce GMV grew by 28% YoY.
- Both the operating margin and the operating profit reached historical highs in 1Q24.
- We set an upside of 47% and the price target at HK$86.00. Buy.
New Experiments in China’s Crowded EV Space
- Making EV itself doesn’t make money, which is why independents like Nio and XPeng are thinking alternative ways to breakeven;
- Tesla envisioned to make money through scale, of which BYD bettered. Tesla also envisioned to make money from autonomous driving (ADS);
- Nio plans to sell its battery swapping service while XPeng is selling ADS to Volkswagen. Both are experiments aiming at breakeven. Both also have new models to launch.
INOD: Profitable AI, Initiating
- INOD is benefiting from the movement to incorporate artificial intelligence (“A.I.”) into many applications
- INOD provides the datasets required for training A.I. and it has quickly become a leading provider of such service
- The Company is now on pace to grow at a faster pace than expected and should lead to higher earnings and free cash flow in coming quarters
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